What effect have Medicare subsidies had on the consumption of medical services?
A) The consumption of medical services has been unaffected, because people don't consider the financial cost when seeking services related to their health.
B) The consumption of medical services has been unaffected, because government restrictions have prevented patients from seeking a level of care above and beyond what they would choose if they had to pay for medical treatment out of pocket.
C) The consumption of medical services has increased because Medicare subsidies give people the incentive to seek more care than they would otherwise.
D) The effect cannot be measured because it is difficult to quantify the amount of resources devoted to our health care system.

Question

Quizplus · Accepted Answer

Medicare subsidies have increased the consumption of medical services, because patients perceive that they are not paying the full cost for services and therefore are more likely to seek care. This phenomenon is known as moral hazard, where people are more willing to take risks or consume more of a product or service when they are insulated from the full cost of doing so. As a result, the demand for medical services has increased, which has led to higher overall costs for the healthcare system.

What Effect Have Medicare Subsidies Had on the Consumption of Medical